Traditional management reporting models haven't helped most companies close the gap between strategy and results. According to David Giannetto and Anthony Zecca, authors of "The Performance Power Grid: The Proven Method to Create and Sustain Superior Organizational Performance" (Wiley, 2006), The Balanced Scorecard and related strategic planning models are designed so that strategy remains the province of the top 5 percent of the organization, and the people who make things happen daily remain in the dark.
"Your employees want to contribute to the bottom line, but no one in the higher levels of management is telling them what, specifically, they need to do to achieve that," explains Giannetto. "Employees need a clear, practical way to understand exactly what they should be doing, every hour of every day."
Giannetto and Zecca claim that strategy will result in improved performance only if it is paired with superior execution. "A company needs strategic objectives, but dwelling on what the right objectives are should not paralyze it. What matters is action," they write.
The authors have devised a tool that combines strategy and execution called the performance power grid. Here's how it works:
• Top management establishes power drivers for each of its strategic objectives. The drivers push the success of the organization by describing in detail how business units and employees will achieve each objective.
• Company leaders create effective and realistic measures that tell managers where the company is and where it needs to be going, giving them the insight they need to improve the bottom line.
• The organization implements the appropriate technology.
• The performance power grid comes into service. Its performance portals contain the outcomes that management has deemed important to each employee or unit within the organization, translated into specific actions or processes. The grid shows managers the status of their unit's performance every day.
• Managers identify the areas that are underperforming by looking at these actions and processes in the performance portals. They can drill down into the metrics to understand which actions have been ineffective and can determine why they aren't working.
• Managers then devise solutions to the problems they've uncovered and implement real changes to their processes.
• Ultimately, managers focus on the causes of their area's performance problems and take action. Leaders and employees alike constantly work toward improving the bottom line and won't stop once they get there.
The power grid doesn't exist in a vacuum. It's not a replacement for performance improvement models, and companies can continue to use The Balanced Scorecard, Six Sigma or any other model that's worked well for them in the past. "The power grid becomes the engine that takes performance to the next level," write Giannetto and Zecca. "It is the framework that makes everything the organization does stand up to the test of time and market leadership."